Florida's Medicaid reform demonstration is entering into its second year.  Now operating in five counties, the reform has unambiguously led to greater competition.  Many plans now offer more services and products than conventional Medicaid.  There are also a variety of benefit packages.  The most popular expanded benefits include over-the-counter drugs and adult preventative dental care.

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This is from Jim Frogue's testimony to the House Energy and Commerce Committee.

Medicaid patient encounter data is sometimes available to researchers, but not to the general public.  That's too bad.  Taxpayers should know where their money goes.  In one state:

• Only 17% of Medicaid women over age 50 were given an annual mammogram. (Many doctors think the number should be 100%)
   
• Less than half the children received well child checkups.
   
• One beneficiary visited hospital emergency rooms 405 times in three years-more than once every three days.

Is the evolution the result of randomness?  Or is there behind it some intelligent design?

During the primary season, Sen. Clinton put the annual cost of her health plan at $110 billion, compared to Obama's $60 billion.  The difference: both candidates pledged to increase taxes on capital (rescind the Bush tax cut for "the rich"). But Clinton claimed additional phantom savings from such measures as electronic medical records (EMRs), managed care, more efficient insurance, etc.

Phantom savings are savings that (1) no one seriously thinks are going to materialize; (2) sound good because they do not threaten the status quo in any serious way (thereby guaranteeing they will not materialize); and (3) are easily forgotten after the fact when they fail to materialize.  Score one for Obama for not yielding to the temptation to make things up.  But that was then.

Now Obama is taking a page from the Clinton playbook and shamelessly doubling the stakes.  Savings will amorphously appear in every part of the system, according to his advisors.  Hard to say who will get what or how they will get it (these things being very complicated), but count on $200 billion savings for ordinary people or $2,500 for "a typical family" every year.

For the record, the Congressional Budget Office [here] estimates that EMRs will save very little money.  The federal government found that its own experiment with managing the chronically ill saved not a dime [here].  Other studies, including one by RAND researchers, predict that managed care or coordinated care or insurers-telling-doctors-how-to-practice-medicine-under-any-other-name may not save money, and in some cases actually increases spending [here].

Note:  I am adding this new manifestation to my analysis of the Obama plan [here].

This blog is fast becoming the go-to site on obesity.  Perhaps that's because I have a new Assistant who is really into healthy lifestyles.  Previous posts are here and here.  What's new:

• Los Angeles is considering banning all new fast-food restaurants in a 32-mile area that is home to its fattest residents. But since there are already 400 restaurants that will be grandfathered in the zone, there is little danger of extreme withdrawal symptoms [link].

• More serious is New York City (home of nanny Mayor Bloomberg), which is banning transfats in restaurants. Going forward, you will have to buy your own lard in the grocery store.

• Neil Trautwein says the National Restaurant Association (which represents fast food outlets) doesn't want you to be fat [link]. It does want you to buy their food, however.

• My daughter Kara is an investor in fast food restaurants. Her advice: If you are going to succumb anyway, try Popeye's, Burger King and Taco Bell-preferably in the Southeast.

• To live longer, eat 30% less. At least this works for mice. [link]

A new paper by Frank Lichtenberg says new cardiovascular drugs increased spending on drugs by $24 per capita over a ten-year period, but reduced hospital costs by $89-for a net savings of $65 for every man, woman and child in the country.  Also, people live longer as a result.

A second paper, using Australian data, finds that newer drugs increased life expectancy by 1.23 years for a cost of $10,585 per year of extra life.  (In the cost/benefit business, this is considered a very good return.)

Hat tip to Jason Shafrim, who has a very good blog.

Senator Obama's critics have accused him of flip-flopping on such issues as campaign finance, wire-tapping, gun control, faith-based initiatives and the terms of withdrawal from Iraq.  The Obama health plan is also in danger of becoming a work in progress.  One week he eyes the Wyden-Bennett bill in the Senate favorably.  The next week he praises Massachusetts's new health care plan.  (Note: both have the very kind of mandates he found so objectionable in Hillary Clinton's health plan.)

More recently, he has endorsed federal subsidies for half of the premiums paid by small employers [here].  Yet the amount of money he would dedicate to this effort ($6 billion a year) is too meager to overcome the dissolution of the employer-based system his plan would cause.

I have modified my general analysis of the plan [here] to reflect this most recent evolution.

Your ancestors did. Drinking water posed the risk of cholera, dysentery and other diseases.  Drinking beer kept them alive.  And they passed their beer-drinking genes on to you.  That's the thesis of Steven Johnson's book, The Ghost Map.  See George Will's take on this [here].

It was good enough for Isaac.  It was good enough for Jacob.  It was good enough for….

I normally agree with Tyler Cowen on most things.  Yet in an op ed in yesterday's New York Times and at his blog, he joined a group of people who (a) I like and (b) mistakenly believe you can solve the problem of rising health care costs by shifting them.

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A natural way to begin the process of reform is greatly expanding the role of Health Savings Accounts (HSAs).  Yet on his blog, Cowen took a gratuitous slap at them, declaring that "HSAs are ineffective as health reform."

            Et tu, Tyler?

HSA Consulting Services will host a surprisingly affordable webinar on the latest IRS guidance on Health Savings Accounts on Wednesday, July 23 at 12:00pm ET.  The webinar will last 90 minutes.  One can sign up for the webinar at any of the following websites: http://www.hsaed.com/, http://www.hsaseminar.com/ and http://www.hsaclearing.com/.

More evidence rolls in: low-carb and Mediterranean diets beat out traditional low-fat diets in a new study [gated]. 

A liberal supports Health Savings Accounts, urges Obama to do the same [link].

Tucked into the Medicare bill: special interest goodies for drug companies and durable equipment providers [link].

Read [here] about 130,000 surgical errors committed in the British National Health Service, aka "the envy of the world."

What do you do if you don't know anything about health policy and you've never in your life had a single original idea about how to solve any health care problem? Start a TV ad campaign, of course. (See NYT article.) 

Folks who are ordinarily on a crusade against the syllogism have discovered a new passion.  They are going to spend $40 million on a series of no-holds-barred, take-no-prisoners ads-all in favor of…. affordable health care.

No doubt the proponents of unaffordable care will run counter-ads.  Recriminations will fly.  The debate will rage.  Points and counter-points will be hurled to and fro.

Should be good fun.

Dr. DeBakey.  He wrote the forward to the NCPA's first monograph.

Dr. Jackson?  Jesse wants to perform surgery on Barack.

Generosity, moral constraints, even religion.  It's all in our genes, says E.O. Wilson [here], father of sociobiology.

Not so fast, says columnist David Brooks. [here]

Let's see if I can explain the ABCs of Medicare finance:

• Even though health care spending has been growing at twice the rate of growth of our income since the day Medicare began, the government doesn't want Medicare to grow any faster than income.

• So it sets the price of every service it pays for and allows increases from year to year no greater than national income growth.

• But, although the government controls prices, it does not control quantities; and doctors respond to price controls by expanding the number of services (more MRI scans, more blood tests, etc.)-all of which keep total spending growing at two times the growth rate of national income.

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Health insurance for most nonelderly Americans is purchased with funds from three sources: (1) an employer contribution, (2) an employee contribution and (3) a government tax subsidy.  The McCain health plan is based on the idea that the first two contributions should be determined by individual choice and competition in the marketplace.  The government's contribution, however, would be the same for everyone: $2,500 for every adult and $5,000 for every family. 

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Barack Obama rarely gives a speech these days without mentioning "universal coverage." Yet, in contrast to Hillary Clinton, Obama has no mandates (other than for children).   Instead, he would rely on incentives.  Yet the incentives in the Obama plan are perverse.  Based on reasonable assumptions, the number of uninsured would rise, not fall, under the Obama plan-even as taxes rise, regulations proliferate and the bureaucracy expands.

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Two states (Missouri and Georgia) allow employers to buy individually-owned health insurance for their employees.  In these states, fortunate employees will get insurance that is personal, portable, long-term, guaranteed renewable and for which they will never face premium hikes just because they happen to get sick.

Would you believe that there are 14 states that do the exact opposite?

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Once a year, says the American Cancer Society.  Every year or two, says the Preventive Services Task Force.  Every two or three years, says the American Geriatrics Society.  Nonsense, say others.  "You don't start screening at birth and you don't continue until death," says a critic.  NYT story here.

 Turns out, it happens all the time.  "Nurses are just starting to get to the point where they're saying, ‘I don't have to put up with this,'" says one.  NYT story here.

A study by the Center on Budget and Policy Priorities (CBPP) claims that Medicaid and SCHIP deliver the same care at a lower cost than private insurance (the study ignored marketing and enrollment costs).  Policy conclusion: Enrolling low-income families in government programs is cheaper and better for all concerned than enrollment in private plans.

As an aside, I've never heard anyone, anywhere say he would rather be in Medicaid than private insurance.  People who say "Medicaid is better" always mean "for someone else." There are also other reasons to be highly skeptical, even without carefully examining how the study was done.

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First, the good news.  Cardiologists with stent patients were invited to make cost-reducing improvements in the way they practice medicine and share in the financial savings they generated.  A study finds the physicians engaged in bulk buying and switched to more efficient devices-saving an average of $17,000 per year per physician (shared 50/50 with the hospital).  Extended nationwide, this behavior would save $195 million.

Now for the bad news.  If other doctors try this, they will be breaking the law.  In fact, they could go to jail!

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Facts are such inconvenient things. What do you do when your own study produces answers that are the opposite of what you hoped for?  The Center for Studying Health System Change (CSHSC) has a solution: spin the results your way anyway. 

"More Americans Delay Health Care," blared a headline over a Wall Street Journal story.  "Cost Concerns Drive Even the Insured to Forgo Treatment," said the subhead.  Large deductibles and cost shifting to patients are the cause of the problem, said the lead author.  "Alarming," said The New York Times [link].

Imagine my surprise when I discovered what the study actually said.

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Everyone knows that hospitals lose money treating the uninsured. But do they really?

• One California hospital charged uninsured patients $10,150 per day and collected $7,815. Its actual costs: $2,036.
• Another California hospital charged the uninsured $11,098 per day and collected $8,535. Its actual costs: $2,172.

In both cases, the hospitals not only made money on the uninsured, they collected a whopping four times what the care really cost to deliver.

These examples are from a fascinating new book, America's Health Care Crisis Solved, by Pat Rooney and Dan Perrin. It's a must-read for anyone interested in health policy.

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Georgia has become the second state to allow employers' (untaxed) funds to be used to purchase individually owned, personal and portable health insurance for employees.  It's part of a new health reform that promotes wider insurance coverage with HSA and HRA products.  See Ron Bachman's report here.

Opponents of private health insurance often praise Medicare for its low administrative costs.  Yet, according to Scott Gottlieb in a WSJ editorial, Medicare has only 20 doctors and 40 clinicians on staff at any one time.  To match such private plans as Aetna and United Health, Medicare would need 4,500 clinicians.

Private plans use trained people to determine on a case-by-case basis what products and services should be covered.  The result:  better care, more personalized service and better access for appeals by patients.

Barack Obama and Hillary Clinton want insurers to be forced to accept all enrollees for the same premium—regardless of health condition.  The result: health plans will run away from high-cost patients and underprovide to them if they do enroll.  By contrast, the Medicare Advantage program pays more for high-cost patients.  The result:  health plans actively compete for the chronically ill and have enrolled more than a million of them in "special needs" plans.  So what does Congress want to do about it?  Kill the program, of course (see WSJ article here).